It's day three of the Carol Thatcher story, and a faultline has opened up across the nation. There are many who were shocked by Thatcher's use of the word golliwog, Adrian Chiles and Jo Brand among them, and many more who are equally outraged that she could be sacked for uttering it.Today the Daily Mail and the Sun both lead on her sacking from The One Show by the BBC. It can only be a matter of time before the inevitable "gate" suffix is attached to the affair; "Golligate" is now the only story that can keep the snow off the front pages.

On Tuesday the Times revealed that Thatcher had compared a tennis player to a golliwog on Tuesday, but it has so far resisted the temptation to editorialise on the subject.

The Mail appears to place a foot in both camps today, running a front-page story suggesting the Queen is racist because her Sandringham shop sell golliwogs dolls, even as it continues to insist Carol Thatcher is not a racist for using the same word.

But on the whole, the Mail and the Daily Telegraph have tended to sympathise with the group who do not believe Thatcher is a racist, perhaps because the majority of their readers fall into it.

Fleet Street's coverage reflects a generational divide. But those who are least likely to be shocked by references to a children's toy that even the Telegraph conceded yesterday was based on a crude caricature of a black person - mostly white, middle class readers, are the first to write letters to Ofcom when Gordon Ramsay unleashes a tirade of four-letter words.

The Mail carried out a similar exercise, pointing out that the word "wog", a shockingly offensive term of abuse for many, is generally thought to be derived from "golliwog", although not everyone agrees.

Whatever its origins, it was, and is, intended as a derogatory and hurtful remark by those who aimed it at generation of black Britain's, as former children's presenter Floella Benjamin pointed out eloquently in the Daily Express today. And it is difficult to imagine the papers rushing to Thatcher's defence if she'd simply called the player "a wog".

Both the Mail and the Telegraph have little time for the BBC, of course, and the fact that Thatcher's comments were made in private has handed them another stick with which to beat the corporation.

Melanie Phillips uses her Mail column today to claim Britain is now a "Stasi State" governed by a politically correct elite whose citizens are too scared to utter in private what they might think twice about saying in public and the fact that others, most notably Jonathan Ross, have made equally offensive comments on the BBC is a theme taken up by many. The Mail helpfully prints a list of past misdemeanours by Ross, Chris Moyles, Sarah Kennedy and other BBC employees, pointing out that they held on to their jobs – although they all apologised for their behaviour.

The BBC1 controller, Jay Hunt, rushed to the defence of the corporation this morning, pointing out that the One Show green room was packed with people when she made the remark, but most commentators agree that didn't make it a public remark.

The details of the conversation are still not public, nor is it year clear which player Thatcher was referring to, despite the Daily Telegraph's assertion today that it was Jo-Wilfried Tsonga.

Tory blogger Iain Dale wrongly wrote that Thatcher had been talking about Andy Murray's hairstyle, a claim he later withdrew. Dale was invited on to yesterday's Today programme to discuss the incident with former New Nation editor Michael Eboda, who was reluctant to damn Thatcher without knowing at whom her comments were aimed.

Thatcher's parentage adds a political dimension to the coverage, with most papers reporting her agent's claims that the BBC has a vendetta against her client's mother.

For the BBC, acting once again as the arbiter of the nation's anxieties on everything from the Arab-Israeli conflict to race and the use of bad language, it is almost impossible to strike the right balance. Its responsibility to reflect the nation's views and constitutional commitment to impartial reporting contrasts with BBC management's zero tolerance approach, sometimes jarringly so.

The Today programme sent reporter Sanchia Berg to the Museum of Childhood in London's East End, which displays a couple of golliwogs, and has another dozen or so stashed away in a drawer in the basement.

Many were nostalgic about the toys, which seem to symbolise a lost age of childhood innocence for an older generation of white, mostly middle-class adults who were raised on Dixon of Dock Green and Enid Blyton books. In fact, as the papers have also been quick to point out, Blyton's Noddy famously featured golliwogs who once stole Big Ears's car. But asked if we should bring them back, the museum's curator said it would be a good idea. Until the tennis player who was the subject of Thatcher's remarks has been formally confirmed, and we have heard his response to Thatcher's comments, many find it hard to reach a judgment about her intent.